Business Loans
Account Receivable Financing
AR Financing: Many times business owners find the cash flow of their business impaired because they have plenty of sales on terms or credit, but not enough cash sales. This causes account(s) receivable to increase, but the bank account to decrease until the customer actually pays the bills.
Often the solution to this need is to obtain a loan against your inventory or a combination of your inventory and account(s) receivable.
Working with your Business Relationship Officer at Anchor Bank, you will be able to discuss if this is a good option for your business. We will look at your sales history, collection experience on your accounts, your sales cycle and then help you come up with a receivables financing package to meet your needs.
Some solutions may be:
- Selling your accounts to a “factoring company”.
- Providing a Line of Credit secured by your eligible account(s) receivable and inventory
- Doing a one time term loan secured by business inventory and equipment and putting the cash from the loan back into the business.
Business Line Of Credit
Business Lines of Credit have many uses in your business. See one of our Business Banking officers to see what type of line of credit may suit your needs.
Typically business lines of credit provide short term credit needs for differences of cash flow in your business cycle. Lines of credit may be set up as “Revolving” or “Draw Down”.
Revolving Lines of credit are a very common business need and are set up with a limit reflecting your needs to sustain your business cash flow until sales or inventory and product are made and the cash is collected. Once you collect the funds from the sales, the line is paid down and then is available to be used again for the next business cycle. Properly utilized, Business Revolving Lines of credit are one of the best used financial tools for a business. The lines are typically reviewed annually to insure the authorized limit is still appropriate for your business needs and to make sure the line is being utilized for the purpose intended. Many times lines do not entirely pay down during the business year because the business has continued to grow and the line is no longer meeting its needs.
Other times the lines are not paying down due to increasing inventory levels, declining sales, or adverse market conditions. Working with your Business Banking officer will determine where you and your LOC are within the business cycle and then take appropriate action.
Draw Down lines of credit are set up with a total limit to be drawn against, with the line paid off when a project is completed and the line is no longer needed.
Both “Revolving Lines of Credit” and “Draw Down” Lines of credit are priced based on the financial and credit strength of your business, if they are secured by collateral or unsecured, and if the lines are being supported by personal guaranties by the business owner. There are also several other factors including if you have a current or potential profitable relationship with the bank based on other bank products you may already have.
Contact your Anchor Business Banking Officer to set up a free consultation.
Business Term Loans
Expand your business, consolidate debt, or purchase a new commercial vehicle or equipment. Our term loans are designed to provide attractive long term financing while preserving your business working capital.
Business Property Financing
These are term loans for the purchase of equipment, balance sheet restructuring, buyouts of business partners secured by business assets, permanent financing of business growth, or any other legitimate business purpose where the payment term is typically greater than 12 months or a business cycle.
Rates and terms are dependent on the request, the debt service ability of the business to make payments, and the credit worthiness of the business.
SBA Lending Products
SBA loans are a Government-guaranteed loan. This program offers competitive financing for newer businesses or those lacking sufficient collateral to meet traditional credit standards.
SBA loans provide your business with financing for:
- Start-up
- Equipment
- Real Estate
- Working Capital
Short Term Borrowings
Short term borrowings have many uses but are typical of any business having a short term need of cash for less than 12 months where the borrower plans on making either a single payment or a series of payments for less than 12 months.
These loans can by secured or unsecured depending on the request. Repayment sources are very specific and identified by the borrower as to when they are expected.
Irrevocable Letters Of Credit
Irrevocable letters of credit are needed when you are dealing with a 3rd party entity, typically a government agency or middleman and there needs to be a guaranty of payment to them based on your business completing a contract provision.
For example: You are developing a parcel of land which is to include paved roadways, completed sidewalks, and street signs. You are in a dilemma. You need to begin selling some of the lots in the development, but you can’t get approval from the building department to start the sales process because you haven’t completed the paving and sidewalks.
You talk to the building department and as long as you deposit with them all the funds for the proposed improvements into an escrow account for them to control, they will let you begin selling lots. They are then assured the money is in place to complete the developments paving and sidewalks whether you finish them or not.
An alternative to the deposit of cash is the irrevocable letter of credit. This is a promise by you, guaranteed by the bank, to the building department that if you ultimately never complete the paving and sidewalks, the bank will pay the funds needed to do this directly to the building department by drawing against the irrevocable letter of credit. The bank secures the irrevocable letter of credit with other assets you own and files a lien on those assets. If the bank ever has to pay out funds under the irrevocable letter of credit, you have created a legal obligation to repay the bank and that obligation is secured by your assets.
This is a very basic example, but Irrevocable Letters of Credit are used for many purposes and usually as a substitute for a direct payment of cash to a 3rd party to guaranty performance of a contractual obligation.
At Anchor Bank, we strive to deliver ‘Banking beyond the ordinary’ every day.
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